Aakash Namkeens It was hot afternoon in May 1998. When Mr. Ramesh Gupta.propritor of Aakash Namkeens private Limited (ANPL) was wondering how to handle some of the new problem he was facing in his business of Manufacturing Manufactur ing and marketing of savoury snacks. Things had not gone well with his company in the recent Past. His entry into the delhi market was failure and he suffered heavy losses due to his untimely with-drawls from this market. He had to close down operations at the jaipur and Mumbai officers too. Sales of the snacks produced and marketed by his company were going do9wn at an alarming rate. At the current rate sales were likely to be around half of the estimated target of Rs 3.5 crore. He was also unsure of fully utilizing his Production capacity. While Mr Gupta wondered how to tackle this issue, the government of India decided to turnover or more than 50 lakh. Alongside the government of Madhya Pradesh also imposed a sels tax of 5 percent. Mr Gupta realized that those policy changes would hit players like ANPL was the leader (central India). Pepsi (Lehar), another big player was also about to go national after it¶s huge success in Delhi Market.
Background and History The company had been in the business of ready to eat snack foods for about 40 years. Mr. Gupta¶s grandfather Started the business with the very small shop. The business prospered and turned into cottage industry that Went by name Prakash sev Bhandar. in the late 1960s Mr. Vitthaldas (ramesh Gupta¶s father) separated From his brother and started a new firm, ³Prakash Ke Namkeen´. Exhibit c.3.1 shows the family tree. Over A period of time the name ³Prakash´ had gained considerable goodwill in and around Indore. In 1976 Prakash Ke Namkeen (Prakash¶s Namkeen) shifted to its present premises and had a production capacity of about 4 Tonners per day. In the year 1991 the company had to change the brand name for marketing its products. Mr. Ramesh Gupta Wanted to avoid conflicts and disputes between the brothers, over using µPrakash¶ as the brand name. He was Reluctant to take the matter to court fearing wastage of time and resources. Hence he decided to use µAakash Ke namkeen¶ as the brand name for his range of products. The name µAakash¶ was chosen because it resembled the original name and it indicated high level of taste and quality. It took some time and money for him to familiarize customers with this name. He conveyed this change in name to the ultimate consumers, by printing statement like ³Prakash! No the new name is Aakash´, on the packaging. He also put hoarding and Posters. On seven hundred buses to convey the change in name. The sales went down a little for some time but recovered rather well. P and L account March 97 March 96 March 95 March 94 Income Sales
344.48
287.86
209.67
159.64
Other income Increase/decrease in stock
0.69
1.09 1.40
0.19 3.64
0.26 1.57
-0.42
Total
346.57
292.59
211.43
159.48
Expenditures Cost of material Manufacturing expenses Other expenses Financial charges
196.48 65.06 49.97 12.25
169.12 33.64 58.34 13.22
115.00 42.13 37.64 10.37
91.56 28.86 26.49 5.28
Total
323.76
274.32
199.14
152.19
PBDT Depreciation PBT Provision taxation
22.79 6.39 16.40 4.27
18.27 5.39 12.88 3.06
12.29 2.31 9.98 3.00
7.19 1.39 5.80 1.56
New Profit
12.13
9.82
6.98
4.24
The Company Aakash Namkeen private Limited came into existence in the year 1992. It has an annual turnover of about Rs 5 crore Mr. Ramesh Gupta is managing director and Rajneesh Gupta (Mr. Ramesh Gupta¶s son) is the director Of company, Mr. Ramesh Gupta is middle aged person who has lot of faith in god and astrology. He is more Or less content and satisfied with the exiting status of the business. Mr. Rajneesh Gupta is in his early twenties and studying for a master¶s degree in business management from one of the local business school. He believes that application for modern managerial concept and participles would help in faster growth. A manager, two supervisors, about 50 skilled and 100 unskilled workers assist him. The company has an office in the Indore¶s trade center siyaganj. In the city office there are three accountants. The company also owns a warehouse and a retail outlet adjacent to its city office as well as 3 retail outlets at prime location in Indore. On an average ANPL shell about 500 kgs of nankeen daily, from these outlets. The premium quality nankeens¶ are manufactured with selective, good quality ingredients cooked in premium edible oil and packed using hygienic system. Pulses, spices and herbs provide nourishment and taste and special care regarding the cleaning and processing of ingredients help in maintaining high standard
The company has a semi ± automated production unit, which is situated about 8 kms away from the city of Indore Many functions in the manufacturing process are performed manually. There are about 15 big bhattis (Burner) in the unit, of these 11 are used for nankeen manufacturing and the other are used for sweets. ANPL has a staff van, which carries its staff daily from the city to the manufacturing unit it also owns 4 Tempos (LCVS) which are used for the physical distribution of furnished products. Raw materials, consisting of groundnut oil, gram flour, spices, groundnut, dry fruits and some other Pulses are usually brought from the open market, through agents. Mr. Gupta is highly involved in purchase Decisions. He feels that costs of raw materials could be brought down significantly if raw materials purchase are tactfully handled. At ANPL certain items are purchased rather more frequently, always keeping a stock Standby for 8-10 days. For certain other products almost a year worth of stock is kept in reserve. The small flourmill in the production unit is largely used for producing gram flour.
The market Namkeens are consumed and relished across all age group. These have always existed as an inseparnle part Of the average Indian¶s eating habits. These crisp savouries are based on traditional recipes. These are consumed at various times of the day and on a Variety of occasion. An average Indian consider it to be ideal snack and looks for variety within the category. Consumers of nankeen could be broadly divided into two categories. 1. Price sensitive, taste conscious consumers who usually buy nankeens from local outlets (retailer¶s brand) 2. Quality and taste conscious consumers who generally buy brands from organized sector players. In terms of volume, sales in the first category are very much higher than in the second category, through Less profitable. But in past few years the growth has been higher in the second category rather than first one. As such, lately Indian markets are witnessing the trend of branding commodity kind of products. One of the firms, seeking distributorship in Delhi, conducted a very small research study on nankeens In the Delhi market. Some of the major findings of this study were as follows: 1. A significant number of retailer, distributers and consumers are familiar with the µAakash¶ brand. 2. Though Akash namkeen are perceived to be good in taste and quality (but not at par with the Haldiram and Lehar), ANPL¶ as a company is perceived to be lacking goodwill amongst middlemen. 3. ANPL¶s sohan papadi is likely to do very well around the festivals. 4. Middlemen generally feel that Akash nankeens are not marketed with sufficient promotion efforts.
The Branded Namkeen Market The namkeen industry mainly comprises of players from unorganized sectors. The firms in the unorganized Sector most often operate in one city and very often one region or locality of a city. These players are Typically very small with turnover often lesser than 25 lakh. They generally shell unbranded namkeen. Some of them distribute branded namkeens through their own outlets. There are about 500 manufacturers of This kind of namkeens (Malvi Indore namkeens)in the city of Indore. The city of Indore known throughout The country for its namkeens. Some popular local brands of namkeens are Prakash, Ratan, and pappuji. There are only a few players in the organized sector, who operate on a large scale. Haldirams has 4 firms in India. There of them (Delhi, Nagpur, Kolkata based) are selling namkeens under the bikaji brand. Pepsi snacks and Food marketing company (Lehar Namkeens), Kothari products limited (Yes namkeens), Amrit Argo Limited (Yumkeenz) Akash Namkeen Private Limited (Akash Ke Namkeen) are the other big player. Of these, Haldirams and Lehar are the leading brand in this category. The demand for namkeens usually goes down around the Manson season, because of health reason There is not much fluctuation in demand otherwise, except around festivals when the demand goes up marginallly. The overall namkeen market was valued at Rs 2,000 crore (an estimated 3lakh tones in 1997). The urban Market constitutes 80 percent of the total namkeen market Consumption of branded namken is relatively Low in southern states. The North accounts for quarter of the total market. Delhi is big market for Branded namkeens . It accounts for about 4 percent of the country¶s consumption savories. In Delhi region There are two big players, Haldiram and Pepsi (Lehar). Both the brand shell the same kind of namkeens , Priced on per with each other. Both these players put together 6,000 tonnes of namkeens in the year 1994 In Delhi itself. Haldiram (Delhi based) is the leader with almost 45 percent market share in Delhi, very Closely followed by Lehar which is 40 percent. Many smaller player like Bikano shah nankeens and Brijwasi entered in Delhi market seeing the Haldiram¶s success. Uncle Chips also jumped into the market With the brand Yumkeenz, taking Lehar head on. Haldiram virtually created the organized sector in traditional namkeens. The credit for spotting marketing Opportunity in the northern market well in advance of other goes to Haldiram. In 1973, Haldiram opened a sweets and namkeens shop in Chandni Chowk. Within few year they were offering polypacked namkeens Under the label Haldiram Bhujiawala. The label distributed all over Delhi and made forays into adjoining UP and Haryana as well. In 1992 Haldiram shifted to Rs 3 crore plants, with a capacity of 7 tonnes per day. Haldiram have got four firms based at Delhi, Kolkata, Nagpur, and Bikaner (branded µbikaji¶). These firms
Are leader in the branded namkeens category in the region around their respective locations. Through all four Firms are separate entities, managed by four brothers; three of them use the same brand name Haldiram. Pepsi entered India, with some of its mega brands in soft drinks and snacks. The snacks division, which Has now been renamed Pepsi snacks and food marketing Company, mainly had big names like ruffles and Hostess (potato chips), Cheetos (corn snacks). For quite some time none of these brands did well India. For Pepsi India soft drinks had been the top cooperate priority. In 1994 Hostess and Cheetos brand were taken Out of market and the division was left with Ruffles, which two was not performing well enough to sustain the Division by itself. It was found that in India taste is the predominant purchase motivator. Also the average Indian householder saw chips as junk food. Namkeens were considered ideal snacks. Consumer preferred Something that could be scooped out or poured out from a pack on to a palm. Hence in 1995 Pepsi started Marketing namkeens (made by Bikanerwla foods) under the brand name µLehar¶. Endorsing sub-brands like Indori aloo bhujia , Kashmiri chewru ,Awadhi moong dal, Gujarati khatta mitha. By 1997 it had become a 12,000 tonne brand, with availability restricted to Delhi and its neighbouring area.
The Marketing mix ANPL offers a wide range of namkeens in terms of mixes and ingredients. It is supplying about 27 varieties, In market outside MP and about 50 within MP. The product mix includes a small range of papadi and related Products (badi). Sahon papadi the only sweet item, is packed and sold outside the local market Namkeens Contribute up to 90 percent of the total sales. The pack sizes for all namkeens are 200 gm, 400 gm, and 1 kg Which was a standard practice across the industry. Smaller packets are more popular amongst individuals Buyers. These smaller 200 gm and 400 gm packs are poly packs, which are very colorful, highlighting the brand Name in bold letters. The package has information regarding the namkeen inside it. Each item has a name That usually signifies either the flavor (like khatta-mitha) or the basic ingridients (like laung sev). The product quality and packaging for the rural market is slightly inferior. This is because a huge quantity of namkeens is being sold loose in the rural market. Hence many retailers prefer to buy 1 kg packets and shell namkeens loose. Percentage wise the urban market share is 80 percent and rest belongs to the rural market. Brand like Haldiram and Lehar are available in the silver foil packaging. The self life of namkeens packed n silver foil about 40 days and only 25 days for a simple poly pack. I low ever the packaging cost goes up to by 10 present if the packaging is silver foil instead of ordinary poly Pack.
Smaller packs are put into a carton. Each carton has a slandered weight of 20 kgs. Packaging is Considered to be a very important aspect in marketing namkeens. Firstly because the snacks have to be kept Fresh and free of moisture. Secondly, the packs have to be transported to far off places and damage while Handling the packs has to be reduced. ANPL has always been charging a marginally higher price than other local players (mainly from the unorganized sector). At the national level the MRP for ANPL products is on par with other big names like Haldiram and Lehar. Depending on the ingredients the MRP ranges from Rs 19 to Rs 29 (for 200 gms pack). The sohan papadi has wo verities, one made in vegetable ghee (Rs 19 for 200 gm) and other in pure ghee (Rs 25 for 200 gms ). In terms of Volume, 15 percent of sale comes from sweets and 5 percent from sohan papadi alone. Valuewise 25 percent is Contributed by sweets soldin local market. The demand peaks between dashera and holi festivals. ANPL is mainly operating in MP, parts Rajastan, Gujarat and Maharashtra. Mr. Gupta is no sure about reentering the Delhi market, though he feels that the company might do well in the Delhi market, which has a huge potential. ANPL has distributors at the district level at several locations in northern and western India. It has a few Distributors in the eastern part as well. Finished products are sent in 20 kg carton to distributors through FOR Indore in Indore there are 70 ± 80 retail outlets selling Akash namkeens. Beside these ANPL has two exclusive retail outlet in commercial location. Lately, ANPL has also opened exclusive outlet, owned by The company finished goods are supplied on daily basis to these outlets and the warehouse from the factory. The company warehouse in the heart of the city. Behind its city office . From this warehouse 20 kg Cartons are sent to several destinations through certain transport agencies. ANPL is also manufacturing and Selling sohan papadi, which is relatively long lasting sweet. These are well packed and sold outside Indore through the same distribution network as of the Namkeens. Initially ANPL had been spending moderately on advertising and sales promotion in the year 1992, ANP spent about Rs 35 lakh on advertising and promotion, when it set up its office in New Delhi. A television Commercial was produced and aired in the afternoon on Zee TV as well as on national network .Glowsign Boards and cloth banners were put up at several location in New Delhi and the company also distributed Scooter stepny covers. Print advertisement appeared in newspaper like the Dainik Bhasker , Navbharaqt tImes and Punjab Kesari. Along with thee the company sometimes also gave calenders and small gifts like key ring to its consumers as well to the middlemen. Every year ANPL puts up a stall in international Trade Fair (Pragati maidan) . it has some leaflets designed for such occasions as well for the other promotional Purposes. This generates a lot os trade inquiries both within as well as outside India. ANPL had also developed
A web page on the internet in the year 1997 ± 98 and is in the process of designing its website . in 1998. ANPL¶s promotion budget was drastically cut down because of financial problems.
Entering
the Delhi Market
ANPL entered the Delhi market in 1984 , when started selling namkeens in Delhi and in some places Around the city through a distributer called SR Food Products Private Limited (SRFPL). In 1986, SRFPL Office at one of the main business centers of New Delhi, Karol Bagh. The idea behind setting up the
